In 2002, Argentina defaulted on its debt amidst an economic and political crisis. The nation and its creditors worked out settlements in 2005 and 2010 to restructure the debt and stabilize Argentina’s budget. Those settlements resulted in holders of Argentina’s government bonds accepting big losses on their investment. 93% of those investors accepted the settlement, but a small group held out, rejecting the partial payment and demanding the full amount they were owed.

It turns out the ads are from a group called “American Task Force Argentina.” Their membership has several investment funds, including Elliott Associates – the leading holdout owner of Argentinian bonds. My guess is that the investment funds are paying the bulk of the group’s expenses, but a big chunk of the members are from the American cattle industry, which probably has something to do with competition from Argentina’s large cattle industry.

The group’s Narco state webpage explains that the drug trafficking issue should matter to U.S. policymakers because, “Argentina is currently looking for U.S. help in its ongoing battle with creditors.” Indeed, Argentina is awaiting a major decision from the U.S. 2nd Circuit Court of Appeals over whether it will have to pay the holdout investors in full.

Even if the holdouts win in court, they still have an uphill battle. Argentina’s leaders have made clear that they are prepared to default on their bonds before the holdouts – Argentina calls them vultures – get a dime. The default would be technical in nature, and Argentina is determined to find a way to continue paying their other bondholders. The holdouts’ strategy with the ads seems to be twofold: sway American public opinion against Argentina, and make it as unpleasant as possible for Argentina to refuse to pay the holdouts.

My sense is that two major roadblocks will work against the holdout investors. First, I can’t imagine any Argentinian voter would support a decision to pay the “vultures” (their term) anything. Argentina’s leaders have every political incentive to fight tooth and nail, and even weather some economic damage from a technical default to avoid such an unpopular outcome. Second, it is in the interest most of the world community to encourage an orderly restructuring of a country’s debt when it becomes impossible for the country to pay. If holdouts are rewarded financially in the case of Argentina, that would embolden bondholders in other shaky countries (i.e.: Greece) to reject settlements stabilizing that country’s economy. Put those two factors together, and I can imagine Argentina and other nations getting pretty creative if necessary to find a legal way to pay Argentina’s other bondholders while rejecting the holdouts’ claims.